On Friday, March 22, 2015, Simon Property Group made its “best and final bid” for its rival competitor, Macerich Compay, raising its former unsolicited bid to $23.2 billion. This announcement came a few days following Macerich’s rejection of its rival’s prior unsolicited offer. Simon’s successful acquisition of Maerich would ensure its position as the nation’s largest mall owner and ensure it a significant interest in high-end retail properties.
On March 9, 2015, Simon publicly announced its bid for Macerich, an offer valued at $22.4 billion. After a week of consideration by Macerich’s board, the company rejected Simon’s offer and adopted a “poison pill” defense to defend against a takeover.
In response to the March 9 bid, Macerich stated that Simon’s offer significantly undervalued the company and was not in the best interests of its shareholders. The company also cited antitrust concerns over Simon’s partnership with the second largest mall operator General Growth Properties Inc.
The takeover attempt was foreshadowed in November 2004 when Simon Property accumulated a 3.6 percent ownership stake in Macerich, making it the company’s eight largest shareholder. The deal, if successful, would be the latest among a series of successful acquisitions for retail properties. In 2007, Simon, in partnership with hedge fund Farallon Capital Management LLC, acquired Mills Corp., a mall competitor for $7.9 billion. In 2012, Simon acquired a controlling stake in Klepierre SA, a French retailer, for $9.7 billion.
The deal reflects the attractiveness and continued profitability of upscale “Class A” malls, which hold luxury stores like Apple and Prada. These high-end malls, unlike those with many traditional retail anchors like Sears and Best Buy, remain lucrative investments. The merger would also give the companies the upper hand when negotiating leases with storeowners at a time when a mall’s success crucially depends on the overall health of its retailers.
Macerich confirmed it received Simon’s revised offer and stated that its board of directors would review the proposal. If the two companies do not meet or agree on the proposed deal, Simon’s unsolicited offer will be withdrawn April 1. All terms of its previous bid remain the same, including consideration in the form of 50 percent cash and 50 percent Simon common stock.